Donohoe extends BoI stake sell-down after raising €249m

Bank’s chief executive sees lender returning to full private ownership next year

The Government said on Friday it has raised €249 million reducing its Bank of Ireland stake from 13.9 per cent to 9.3 per cent since late June.

Minister for Finance Paschal Donohoe has decided to extend the timeframe for drip feeding Bank of Ireland shares on to the market from early January to May 20th, as he seeks to accelerate the lender's full return to private ownership.

Welcoming the move, Bank of Ireland chief executive Francesca McDonagh said she expected the lender to return to full private ownership next year, making it the first to do so among the State’s three surviving bailed-out banks.

Price

While the Minister has refused to give the minimum price he is prepared to accept for Bank of Ireland shares in the current stake sell-down plan, he has received an average of €4.96 per share sold to stock market investors in recent months.

Goodbody Stockbrokers analyst Eamonn Hughes said that the rate at which the State has been selling shares since June suggests that its position will be down to 3 per cent by late May. “Maybe that that stage, it could continue further with the plan or maybe such a stake would be sufficiently manageable in size to place in the market,” he said. “Either way . . . the State is likely to have exited the bank by the summer.”

The proceeds from Bank of Ireland share sales since June brings the total that taxpayers have recovered from the lender since it received a €4.7 billion crisis-era bailout to almost €6.2 billion. That figure includes money received from the sale of bank stock, preference shares and bailout bonds following the crisis. It also includes dividends and the collection of guarantee fees.

“When I announced the launch of the share trading plan in June, I highlighted the benefits of gradually disposing of the State’s investment in Bank of Ireland using this approach,” Mr Donohoe said. “Given its success to date, I believe it is in the best interest of the taxpayer to extend the plan for a further period.”

He added: "In line with the Government's commitment to deliver best value for the taxpayer, shares will not be sold below a pre-determined floor price which the Department of Finance will keep under review."

Process

The Minister is using Citigroup to sell shares. The department is being advised by investment bank Rothschild & Co and law firm William Fry in relation to this transaction.

Bank of Ireland chief executive Francesca McDonagh said the bank welcomed the announcement “which continues a very positive process – for Irish taxpayers, the Irish economy, and Bank of Ireland. The ongoing share sell down is an important process in normalising the relationship between the Irish State and Bank of Ireland. We look forward to being the first Irish bank to return to full private ownership in 2022.”